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Tuesday, 10 September 2013

1. The first Indian bank to open a branch outside India in London in 1946? a) SBI b) PNB c) BOB d) Canara Bank e) BOI 2. Coins are minted at ? a) Mumbai b) Hyderabad c) Noida d) Kolkatta e) All of these 3. Which of the following is not a function of commercial bank? a) Providing project finance b) Selling mutual funds c) Deciding policy rates like CRR, Repo rates/SLR etc. d) Settlement of payments on behalf of the customers e) Providing services such as locker facilities, remittances etc.. 4. The New Capital Adequacy Frame work prescribed for the banks is commonly known as? a) KYC norms b) Credit Policy c) Basel accord d) Fiscal Policy e) None of these 5. Expand the term FRBM? a) Financial Responsibility and Business management b) Fiscal Responsibility and Business management c) Financial Responsibility and Budget Management d) Fiscal Responsibility and Budget Management e) Formal Responsibility and Business Management 6. What is an Indian Depository Receipt? a) A deposit account with a Public Sector Bank b) A depository account with any of depositories c) An instrument in the form of depository receipt created by an Indian depository against underlying equity shares of the issuing company d) An instrument in the form of deposit receipt issued by Indian depositoriese) None of these 7. Land Development Banks form a part of the? a) Commercial Banks b) Industrial Development Bank of India c) Food Corporation of India d) Co-operative Credit Structure e) None of these 8. Which of the following cannot be called as a value Added Service offered by bank? a) Special Accounts for poor sections of society b) Accident Insurance Cover c) Instant credit of outstations cheques d) free cheque books e) All of these 9. The minimum number of women required for formation of women groups under Development of women and children in Rural Areas Programme is?a) 20 b) 15 c) 10 d) 05 e) None of these 10. What is the full form of 'FINO', a term we see frequently in financial newspapers? a) Financial Investment Network and Operations b) Farmer's Investment in National Organization c) Farmers Inclusion News and Operations d) Financial Inclusion Network and Operations e) None of these 11. With an aim to provide better services to the debit card holders, the Reserve Bank of India (RBI) has directed all commercial and public sector banks to introduce new Automated Teller Machines (ATM) that can deliver lower denomination notes such as? a) Rs 10 b) 20 c) 50. d) None of the above e) All the above 12. Which of the following banks is limited to the needs of agriculture and rural finance? a) RBI b) SBI c) IFC d) NABARD e) Axis Bank 13. Open-market operations of Reserve Bank Of India refer to? a) Trading in securities b) Auctioning c) Transaction in gold d) All of these e) None of these 14. Which of the following has introduced a new tool named Data Warehousing and Business Intelligence System for speedy analysis of data and identifica-tion of violations? a) IRDA b) SBI c) RBI d) TRAI e) None of these 15. The Reserve Bank hiked the limit for foreign investment in Asset Reconstruction Companies (ARCs) from the earlier cap of 49 percent to? a) 74 % b) 47 % c) 57 % d) 72 % e) None of the above 16. Which of the following is NOT the part of the scheduled banking structure in india? a) Money Lenders b) Public Sector Banks c) Private Sector Banks d) Regional Rural Banks e) State Co-operative Banks 17. Who is the chairman of the committee constituted by RBI to study issues and concerns in the Micro Finance Institutions sector? a) Y.H. Malegam b) Dr K.C.Chakraborty c) C.Rangarajan d) M.Damodaran e) Smt Usha Thorat 18. An instrument of qualitative credit control in india is? a) Open market operations b) Credit rationing c) Change in reverse ratio d) Bank rate policy e) None of these 19. Which of the following is the full form of the term SLR as used in the banking sector? a) Social Lending Ratio b) Statutory Liquidity Ratio c) Scheduled Liquidity Rate d) Separate Lending Rate e) None of these

Sunday, 8 September 2013

The Reserve Bank of India on 6 September 2013 allowed the Non-Resident Investors including NRIs to purchase shares of Indian entities Under FDI Scheme. The investment can be made as per the mentioned conditions. RBI has allowed the NRIs to make investment under the FDI scheme only on the listed entities, on recognized stock exchanges.

The Reserve Bank of India has decided to include the non-residents, including the NRIs to acquire the shares of domestic companies listed under FDI scheme, on the stock exchanges through a registered broker, if the investor has already acquired and continues to hold control in accordance with SEBI, Substantial Takeover Code.

RBI has also cleared that the inward remittance using the normal banking channels can be used for payment of the transfer of shares to non-residents consequent to purchase. The debit to the NRE pr FCNR account of a person with authorized dealer or bank can also be considered for making the payment of the transferred shares. Escrow Accounts (non-interest bearing) maintained in India can also be used to debit the payment. The prices of the transfer of the shares for the non-resident shareholders would be made in accordance to the pricing guidelines mentioned under, FEMA.

Till now, the FIIs (Foreign Institutional Investor), QFIs (Qualified Foreign Investors) and NRIs were eligible to invest and acquire the shares on the recognized stock exchanges of India in compliance with the FEMA (Foreign Exchange Management Act) regulations. But the NRIs were not allowed to acquire shares on exchange (bourses) under the FDI Scheme.

To contain the current account deficit, RBI announced some measures to curb the demand for gold in the month of September 2013 considering one of the major reason for widening the current account deficit.

Supplies of the metal to special economic zones (SEZs) will not be counted as exports to qualify for further purchases from overseas. As per the existing norms, 20 percent of every lot of imported gold has to be made exclusively available for the purpose of exports.

Gold made available by a nominated agency to units in the SEZ and export oriented units, Premier and Star trading houses shall not qualify as supply of gold to the exporters.RBI announced that entities and units in SEZs and EoUs, Premier and Star trading houses are permitted to import gold exclusively for the purpose of exports.

The government aims to bring it down to USD 70 billion in 2013-14 fiscal from 88 billion US Dollar in 2012-13. Gold imports in April-July 2013 rose 87 percent to 383 tonnes.

Tuesday, 3 September 2013

The Reserve Bank of India on 27 August 2013 released the Discussion Paper on ‘Banking Structure in India – The Way Forward’.

Primary Features of the Discussion Paper on ‘Banking Structure in India – The Way Forward’

• The paper focuses on certain building blocks for the reorientation of the banking structure with a view to addressing various issues such as enhancing competition, financing higher growth, providing specialised services and furthering financial inclusion.• The paper also emphasised the need to address the concerns arising out of such changes with a view to managing the trade off for ensuring financial stability.• The paper discussed that the overall thrust of the reorientation is to impart dynamism and flexibility to the evolving banking structure, while ensuring that the structure remains resilient and promotes financial stability.

Crucial issues covered by the Discussion Paper on ‘Banking Structure in India – The Way Forward’

• Small banks vs. large banks: The paper discussed how small local banks play an important role in the supply of credit to small enterprises and agriculture and banking services in unbanked and under-banked regions in India. However, while permitting large number of small banks, there are certain issues which need to be addressed suitably and these issues include their size, numbers, capital requirements, exposure norms, regulatory prescriptions, corporate governance and resolution.• Universal Banking: The paper discussed that the universal banking model remains the dominant and preferred model in most of the post crisis world because of the failure of many investment banks during the crisis. In this banking model, the Financial Holding Company (FHC) structure offers a range of benefits and therefore becomes a preferred model. The paper discussed that there is a need of promoting investment banks as well as investment banking activities. • Continuous Authorisation: The RBI, in its paper discussed that there is a case for reviewing the current ‘Stop and Go’ licensing policy and consider adopting a continuous authorisation policy, as continuous authorisation keeps the competitive pressure on the existing banks and also does not strain the banking system as the block licensing may do. The entry norms should however be stringent in order to encourage the entry of only well-qualified entities. • Conversion of UCBs into commercial banks: The RBI in its paper discussed the possibilities of converting the UCBs to commercial banks or small banks in order to help them reach the regions that are characterised by poor banking outreach.• Consolidation: The RBI suggested, in its paper that taking into account the pros and cons of consolidation, it has to be taken into consideration that while consolidation of commercial banks with established synergies and on the basis of voluntary initiatives is welcome, it cannot be imposed on banks. A measured approach is to be made both on consolidation and global presence even if attaining global size is not imminent.• Presence of Foreign Banks in India: The importance of the foreign banks in India has increased tremendously after the crisis. Domestic incorporation of these banks through the route of subsidiarisation has gained momentum. • Presence of Indian Banks at International Locations: The RBI suggested local incorporation by large banks either individually or in joint venture mode with other banks or with overseas banks, at the international locations. This will enable the large Indian banks to engage in a much wider range of activities and have greater potential for growth. Eventually, this may facilitate banks increasing their global reach.• Government Ownership: The Central Bank suggested that optimal ownership mix in the banking sector is required to promote a balance between efficiency, equity and financial stability. The Government of India may consider options from menu of choices available such as issue of non-voting equity shares or differential voting equity shares, adopting FHC structure or diluting stake in PSBs.• Deposit Insurance and resolution: The RBI, in its paper discussed that the existence of an effective resolution regime is essential for any type of banking structure India may pursue. The FSB key attributes could be the guiding principles for setting up a resolution framework in India.• Indicative reorientation of the banking structure: The RBI suggested that the reoriented banking structure would comprise four tiers. The first tier may consist of three or four large Indian banks with domestic and international presence along with branches of foreign banks in India. The second tier is likely to comprise several mid-sized banking institutions including niche banks with economy-wide presence. The third tier may encompass old private sector banks, Regional Rural Banks, and multi state Urban Cooperative Banks. The fourth tier may embrace many small privately owned local banks and cooperative banks.

The need of Discussion Papers by the Reserve Bank of India

The need of reviewing the banking systems has been taken up by various jurisdictions, primarily after the global meltdown. The motive of current exercise in reviewing the banking structure in India is to put forth various options to enable the banking system to cater to the needs of a growing and increasingly globalising economy.

Various studies have been undertaken in order to examine whether the nature of the banking structure matters for the economic growth of a country.

In the light of all this, the Reserve Bank of India issued guidelines for licensing of new banks in the private sector on 22 February 2013. In those guidelines, it was stated that there was a need for an explicit policy on banking structure in India, keeping in view the recommendations of the Narasimham Committee, Raghuram Rajan Committee and other viewpoints.